3rd Kuwait Oil & Gas Show and Conference
His Excellency Mr. Essam Abdulmohsen Al-Marzouq
Minister of Oil and Minister of Electricity and Water
Chairman of the Board of Directors of Kuwait Petroleum Corporation
15 – 18 October 2017
Mohammed Barkindo, Secretary General of OPEC
Your excellences, ambassadors, and chief executive officers of oil companies,
Welcome to the 3rd Kuwait Oil & Gas Show and Conference, and I wish you a happy stay.
First of all, I would like to thank the organizers of this event, which is considered the biggest oil gathering in Kuwait and represents an opportunity to showcase the latest technologies in the oil and gas industry. It also gives participants the opportunity to communicate with leading companies, decision makers, specialists and businessmen in attendance.
Ladies and gentlemen,
The latest global oil forecasts released by the OPEC Secretariat pointed out that the global demand on energy is expected to increase to 35% by 2040 compared to the 2015 average, coupled with an increase in the share of renewable energy resources (wind power, photovoltaic panels, geothermal energy, solar power) in the mix of energy from 1% in 2015 to 5% in 2040, while nuclear power's share is predicted to increase from 5% in 2015 to 6% in 2040. This means that fossil fuel, which includes oil, gas and coal, will remain a main resource to meet the future demand on oil, and that by 75% in 2040 compared to 81% in 2015.
Despite predictions for oil to continue to dominate the future of energy, great challenges are facing us especially in light of the drop in crude prices, which drove governments in several oil producing countries to carry out economic and financial reforms while diversifying economy resources amid high levels of competition, as well as the need to optimize energy usage efficiency via advanced technology applications while making sure that oil and gas industry activities adhere to environmental standards.
We in the State of Kuwait continue moving forward with our plans and investments to carry out vital oil projects according to the 2040 strategy without being affected by oil price levels. These plans include crude oil and gas exploration and refining to produce high quality petroleum products, in addition to expanding in petrochemicals. These projects are set to enhance the environmental performance and safety at out refineries, while also provide new job opportunities and support the state's economic growth.
In this regard, several initiatives and joint workshops were launched to carry out the local content strategic program in partnership with the private sector, in order to support Kuwait's local economy and develop the private sector to become a true partner in development.
Furthermore, a framework to increase cooperation between oil companies, state departments and local private companies was prepared, while the scope of services and industries that the oil sector will need in the coming years was specified. Meanwhile, a mechanism was developed to facilitate transfer of knowledge and modern technologies from the oil sector and global companies to the private sector in order to establish alliances that help develop the technical capabilities of local companies. In addition, educational and training programs were put together to develop Kuwaiti human resources and utilize the outcomes of oil operations to establish a manufacturing industry inside Kuwait.
The security of supplies and markets' stability is a strategic goal that OPEC made sure to cooperate in order to achieve. However, markets' volatility which became evident during the second half of 2014 came due to an unprecedented increase in production levels, especially from outside of OPEC. As a result, oil prices dropped to unprecedented levels, which created a suitable foundation for cooperation between OPEC and non-OPEC producers to move in order to rebalance oil markets. The Algeria Agreement in September 26, 2016 was the fruit of those efforts, and we are currently celebrating the first anniversary of this agreement.
The agreement between OPEC members and some independent exporters such as Russia to reduce oil supplies helped markets regain stability.
There are several positive indications that make me confident in the markets' ability to regain stability, such as the accelerating drop in oil reserve's surplus, which makes us even more optimistic that we are going in the right direction to achieve stability in the markets.
The supply reductions of OPEC and independent producers, which reached 1.8 billion barrels a day starting from January 2017, helped reduce surplus in the oil reserves and return some balance back to the markets, especially that this rate is equal to 2% of the global oil production.
Kuwait plays a pivotal role in making sure to implement the agreement through its chairmanship for the Joint Ministerial Monitoring Committee. The success achieved reflects the sense of responsibility that producers among this alliance show towards more reductions, which yielded even more commitment until balance is restored in the oil markets, hopefully sometime during 2018. We are looking forward to the next meetings in late November 2017 to assert this direction.
Despite the challenges facing the oil industry, I believe that we all can agree that our main goal should be to provide a stable and sustainable future for energy for the sake of the future generations. We will not be able to move forward and transform those challenges into opportunities unless through cooperation, innovation and modern technology transfer.
Therefore, we are proud to sponsor the 3rd Kuwait Oil & Gas Show and Conference on behalf of His Highness the Prime Minister; an event that managed to bring together this large number of participants from the industry. Hosting this event again in Kuwait is an example for cooperation in order to exchange technical knowledge and expertise that help improve the upstream industry and achieve integration between refinement and petrochemicals.
Thank you for listening, and I hope that we come up with recommendations that benefit the oil and gas industry in Kuwait and the region.